Back in 1963, West Germany slapped a tarriff on frozen chicken exported from the U.S., and the Johnson administration retaliated by slapping a 25-percent tariff on all pickups and cargo vans imported into the U.S. (take that, VW Transporter!). The chicken tax, as it's called, lives on today, and it's the reason Toyota and Nissan assemble all their pickups in the United States -- there'd be no profit otherwise
How then does Ford make money on cargo versions of its Transit Connect minivan, which is built in Turkey? A news feature in today's Wall Street Journal explains how Ford avoids the tax.
Evidently, a load of Transit Connect Wagons (Ford doesn't call them "Vans," and this is key) arrives in Baltimore. They're finished vehicles with seats, carpeting and side/rear window glass. A few will go straight on to Ford dealerships and be sold as passenger vans. But most head to a warehouse, where said seats, carpeting and glass are stripped out. This leaves a few holes in the floor (where the seat bolts were), so each van gets a new floor panel. The conversion takes about 5 minutes, and then the Transit Connect is ready to be sold as a "Cargo Van." But now it's only subject to a 2.5-percent import tax, instead of the 25-percent hit.
You might think the seats could be shipped back to Turkey for use in the next U.S.-bound batch, but Ford says it's more cost-effective to shred the seat cloth and foam for landfill cover and recycle the steel. --Thanks to Bob Holland for the tip.
2002blksle says:
12:18 PM, 09/22/09
OMG.
brn says:
01:12 PM, 09/22/09
Terrible. Now, that's all I think about when I see these things.
moparbad says:
02:00 PM, 09/22/09
If you want seat, windows and carpet, Ford charges MORE to leave them in the van.
Yep.
estreka says:
03:52 PM, 09/22/09
What a waste of resources.
gearhead1977 says:
05:58 PM, 09/22/09
The problem is still having a tariff from the 60's on imported vehicles. Done to protect the auto industry,look where that got us. It also (eventually) forced the imports to build plants here,creating more jobs. And now Ford has to waste resources building parts that go from parts bin to scrap heap to circumvent a tariff designed to protect it?
actualsize says:
06:42 PM, 09/22/09
The 4Runner 2-door (remember those?) went away because it was classifed as a truck and was subject to the full 25% tax. The 2-door 4Runner penalty persisted even after the 4Runner received a fixed roof and fixed rear seats. Meanwhile, the 4-door 4Runner was created precisely because such a configuration was deemed a "station wagon" instead of a truck, making it exempt and much, much cheaper.
This was Pre-Explorer and the 4Runner was very successful at the time. One could argue that this tax hastened the birth of the SUV explosion.
firstwagon says:
08:18 PM, 09/22/09
Why has no one repealed a tax that is as out of date (and stupid to begin with) as that one?
alman08 says:
08:37 PM, 09/22/09
Ford is trying to find ways to save the domestic auto industry (well, save Ford itself). they're doing it without borrowing money from the Fed ... get rid of that stupid chicken-shit tax right now! and people can even buy a Transit Connect cheaper even perhaps.
Can anyone out there wake the Fed up?
brn says:
09:01 PM, 09/22/09
Let's not be so quick to get rid of the tax. China and Japan don't exactly make it easy for us to sell US made vehicles there. The chicken tax may not be the best solution, but a complete abolishment isn't the right answer.